In Hawaii, firms like longtime employer mandate

Obamacare’s requirement that large companies offer health insurance may be polarizing for much of the nation — but it had Hawaiians at Aloha.

Unlike its 49 counterparts, Hawaii has been living with a strict employer mandate for nearly 40 years. And as businesses nationwide celebrate a one-year delay in the similar Obamacare requirement that they cover workers, supporters of Hawaii’s law say theirs is proof that the rest of the country could adjust — and even learn to like it.

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“For the most part, the business owners here want to take care of their employees. They’ve embraced [the law],” said Brian Fitzgerald, a spokesman for the Hawaii Health Connector, the state health insurance exchange being set up to expand coverage under Obamacare.

That’s been the case in Massachusetts, too, which introduced a gentler version of the employer mandate and an individual mandate in 2007. Both have been broadly accepted.

In Hawaii, there’s no momentum to repeal the state rule, even among those Republicans who are skeptical. State Senate Minority Leader Sam Slom says he’s introduced repeal bills that have been nonstarters even within his own caucus.

“I hardly get any support for them either inside the Legislature or outside of it,” he told POLITICO. Slom said businesses are less concerned about the coverage requirement than the slew of specific state-required benefits, which he says are more generous than the essential benefits in Obamacare.

State Sen. Josh Green, a Democrat and physician who chairs the Senate Health Committee, agrees that the employer mandate, formally known as the Prepaid Health Care Act, has become an accepted part of the state’s health care system and is, for the most part, taken for granted.

“There is almost no mention of the Prepaid Health Care Act here among anyone,” he said.

Hawaiian officials say it’s no small irony that the 1974 Hawaii law was made possible by President Richard Nixon, who that year also signed the Employee Retirement Income Security Act – which included a series of restrictions on employer-based health care. That law, which some initially thought would preempt Hawaii’s plan, also provided the opportunity for a waiver, which Hawaii obtained several years later, after litigation.

Some supporters say it’s that exemption itself that has helped preserve the law all these years. It requires that the state keep the law as is — or risk losing it altogether.

When President Barack Obama pushed the Affordable Care Act through Congress, Hawaii was a little worried, so the state’s then-senators, Daniel Akaka and Daniel Inouye, helped get language in to preserve the stricter state mandate.

In Hawaii, employers of any size must offer coverage to anyone working more than 19 hours per week, and the coverage can’t cost more than 1.5 percent of a worker’s income. Companies that fail to offer enough insurance can see various permits held up or face administrative fines.

The federal mandate, on the other hand, applies to businesses with more than 50 full-time employees, with full time defined as 30 hours per week. Affordable coverage is defined much more loosely as 9.5 percent of income.

Slom, an economist who weighed in on the state law when it was being drawn up, said Hawaii was well-placed to experiment with an employer mandate because it had a historically high rate of insurance — about 90 percent when the law passed in 1974. The mandate helped bring up the insurance rate to 98 percent, although it slipped back to about 90 percent during the recession.

Only Massachusetts has matched that rate of coverage.

Mario Ramil, who was commissioner of Hawaii’s insurance department in the 1980s, said he hopes the nation takes a cue from the Aloha State.

“I think that Hawaii’s experience should serve as something to look to in determining a model for the nation,” he said. “It’s 40 years since we’ve had it, and in that 40 years, we have the lowest uninsured rate. We have a very healthy population.”

It wasn’t always a no-brainer. Ramil said that in 1977, Standard Oil filed a lawsuit over the law. Eventually the state sought and ultimately won an exemption from ERISA to protect it from further challenges.

There is some concern about how Obamacare will play out in the state. Green, the Democratic state senator, said many of the state’s 90,000 uninsured are young and healthy — and unlikely to sign up for insurance under Obamacare, despite the fine they’ll face.

“I think that many of these individuals will not see becoming insured as a benefit that outweighs the penalties, and therefore will not engage,” he said in an email. “As a physician, I would have preferred an approach [in the ACA] that focused more on access to services rather than access to coverage, which will be of minimal benefit if there aren’t more doctors and nurses to care for patients.”

CORRECTION: An earlier version of this story incorrectly described the timing of an exemption Hawaii was granted to preserve its employer mandate legislation. The state ultimately won the exemption in 1983.